58% to Pay More Under Revised Catastrophic Care Plan

Nearly 60% of America’s senior citizens would be forced to pay more for their Medicare catastrophic care benefits under a program approved by the House Ways and Means Committee, according to a study made public Wednesday.

Middle- and upper-income seniors would have their financial burdens eased under the House plan, while lower-income persons would pay more, the report said.

In August, the Ways and Means Committee rewrote the financing system in an effort to defuse the anger of senior citizens who have protested a surtax enacted last year to finance catastrophic care, a major expansion of Medicare.

The special tax, levied on people over 65 who pay federal income tax, would take effect next year. The sliding-scale surtax would rise with income, reaching a maximum of $800 for a single person and $1,600 for a couple.

‘Political Folly’

“It is the height of political folly to raise costs for three out of five older Americans,” said Ronald Pollack, executive director of Families United for Senior Action, an advocacy group for the low-income elderly.

“It is the depth of economic injustice to shift the burden of catastrophic health care onto those least able to afford the cost of illness,” said Pollack, whose organization prepared the report.

Backers of the new financing plan have argued that it is the only way to preserve the catastrophic care program. But the fight is expected to continue on the House floor, where some members who are opposed to any surtax will attempt to repeal the program entirely.

The Senate Finance Committee is scheduled to consider the issue today. The committee will hear a staff report on alternative plans to reduce the surtax and curtail benefits.

The catastrophic care program would cover costs associated with an unlimited number of days of hospital care, after the patient pays for the first day. It also would provide coverage of prescription drugs for the first time.

Flat-Rate Plan

The plan approved by Congress last year calls for America’s 30 million Medicare beneficiaries to pay a flat catastrophic care premium of $4 a month this year and $4.90 next year, with the premium rising to $10.20 a month by 1993. The maximum surtax would be $800 per person next year and climb to $1,050 in 1993.

Only those Medicare participants who pay federal income taxes, about 40% of all beneficiaries, would pay the surtax.

Under the Ways and Means plan, the burden would be rearranged, with more of the cost shifted to less affluent people. The flat premium, paid by all beneficiaries, would be raised to $8.40 next year and $20.70 in 1993.

In addition, the surtax would be levied at higher income levels. Under current law, a single person with an income of $35,000 to $40,000 would pay the maximum surtax of $800. But the Ways and Means plan would not levy the maximum tax until a beneficiary’s income reached a range of $45,000 to $50,000. The exact level would depend on the type of income and deductions.

For a married couple, the maximum payment would be levied at incomes of $60,000 to $65,000 under current law. Under the Ways and Means plan, it would take effect at incomes of $80,000 to $100,000.

The higher catastrophic care premium paid by all beneficiaries, rich and poor, means that the surtax levied on the top 40% of earners would be reduced.

58% Would Be Worse Off

An estimated 12.8 million senior taxpayers would pay more through the Ways and Means plan, compared with 5.6 million who would pay less, the Families United report said. Overall, 58% of taxpayers over 65 would be worse off under the Ways and Means plan than current law, it said.

In California, 1.3 million people would be worse off and 636,000 better off, the report said. “A disproportionate number of seniors who will pay more under the Ways and Means revisions are from income groups that can least afford to bear an additional financial burden,” the report said.